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The most important meal of the day

Robert Carter decided to beef up his breakfast recently by giving McDonald’s new Steak’n Egg bagel a shot.

“I was surprised -- it was really good. It had some spices I didn’t expect,” says the executive director, food service at NPD Canada, referring to the sautéed onions and HP sauce on the fast food behemoth’s newest menu item.

Taco Bell began airing TV ads Thursday, March 27, 2014, that feature everyday men who happen to have the same name as the McDonald's mascot. The marketing campaign is intended to promote Taco Bell's new breakfast menu, which features novelties like a waffle taco.
(AP Photo/Taco Bell via Taylor Strategy) (Uncredited / AP)

Breakfast is considered the most important meal of the day, and that’s especially the case now in fast food land, where the big players are trying to drive traffic through the doors in the morning like never before.

Up until three years ago, breakfast was actually the most skipped meal of the day in Canada. But lunch – which used to be the most popular – has now taken its place, with Canadians passing up the mid-day meal an average 44 times a year, says Carter.

Analysts attribute the switch mainly to the concerted effort from so-called ‘quick serve’ restaurants to get your day started with coffee in one hand and a portable sandwich in the other until late in the morning.

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“One of the key drivers around breakfast is convenience. People are time-starved,” says Carter.

The giants are bombarding consumers lately with cute ads, like the latest from Taco Bell, which uses real guys named Ronald McDonald to stump for their newly launched breakfast in the U.S. Residential mailboxes are stuffed with more fast food coupons these days, and new menu items keep popping up to gain market share in the only segment of the business that is actually growing.

“It does seem to be a bit noisy,” says industry analyst Andy Brennan of IBISWorld Inc.

“The whole fast food industry is very saturated at the moment. The next couple of years will be a battle to see who is going to win” the breakfast wars, he notes.

Last year, the volume of traffic at fast food restaurants in Canada grew by 7 per cent. Meanwhile lunch and late snacking were flat, and supper actually declined by 4 per cent, according to market research firm NPD Canada.

“They’re hammering breakfast because in a market that is pretty flat overall, you want to focus on the only growing area,” says Carter.

“Breakfast is the fastest growing ‘day-part’ of the industry in the last five years,” he says.

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“It’s most definitely up for grabs,” agreed Brennan.

Tim Hortons took over from McDonald’s as Canada’s top breakfast destination a year after it introduced breakfast sandwiches in 2007. But second-place McDonald’s has since hit the ‘Roll Up the Rim’ java giant where it hurts with its popular premium roast coffee and McCafe offerings.

“Ultimately it comes down to the momentum from the brewed coffee. That has been driving breakfast traffic,” explains McDonald’s Canada spokesman David Ford.

McDonald’s Canada also recently extended its breakfast hours – but earlier rather than later – from 4 a.m. instead of 5 a.m., to 11 a.m., seven days a week. Two years ago Tim Hortons extended its breakfast hours until noon all week, including holidays.

The breakfast club is getting more creative with the morning market accounting for about 20 per cent of quick serve restaurants’ revenue. McDonald’s just added steak to its ever-growing breakfast menu; Tim Hortons just increased the size of its original hash brown by 35 per cent; Burger King is pushing 25-cent coffee and its new Egg McMuffin clone; and Taco Bell just made a high-calorie foray into breakfast in the U.S.

“It’s a lucrative market and it’s very competitive,” says Sridhar Moorthy, marketing professor at the Rotman School of Management.

“The basic idea is to try to maximize the dollars you spend per visit,” he says, noting consumers are more likely to buy breakfast food at the same place they go for their favourite coffee.

The breakfast trend has driven the proportion of Canadians who visit a restaurant daily to 47 per cent. A big chunk of that is coffee. Canadians consume nearly 2 billion servings of coffee a year outside their home.

Most chains are sending mixed messages, promoting healthier options like oatmeal, egg whites and turkey sausage on their signage while still offering all the greasy, heavier items that weigh in as high as 700 calories.

“There’s not one clear strategy for breakfast among the traditional fast food chains, but they are aiming to grab a younger market,” says Brennan, noting the coveted Millenial customer base gravitates more to cheap but healthy food that they can eat on the go.

For instance, famous Subway dieter Jared probably wouldn’t go for the chain’s Sunrise Subway Melt, which is 490 calories, but could opt instead for the selection of egg white breakfast sandwiches under 200 calories. Both Tim Hortons and McDonald’s are pushing breakfast items under 300 calories, while the Golden Arches promotes its new Steak’n Egg Bagel, which is 650 calories.

Taco Bell’s new “First Meal” menu items in the U.S. include waffle tacos, burritos, an A.M. Mountain Dew (mixed with orange juice) and the A.M. Crunchwrap with sausage, which comes in at 710 calories.

She said the big players are taking the “let’s throw it up and see what sticks” approach because “they haven’t found the secret sauce yet for breakfast” that will boost sales in a low-growth area.

“For us it’s always the balance,” explained Ford. “Last year we introduced veggie McWraps and then we came out with poutine.”

Meanwhile, Carter says two more chains in Canada are expected to jump in with the rest of the breakfast bunch later this year. Industry watchers are betting the most likely new entrants would be Taco Bell and Wendy’s, which both already serve breakfast in the U.S.

“Eventually there will be some clear winners,” says Brennan, noting McDonald’s and Tim Hortons have the major advantage of widespread brand recognition.

Regardless of the outcome, Carter notes: “With all the choice, consumers win.”

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